Loyola College (Autonomous), Chennai - 600 034: APRIL 2016 Co 6608 - Financial Management
Loyola College (Autonomous), Chennai - 600 034: APRIL 2016 Co 6608 - Financial Management
PART–B
1
(iii) If the company’s cost of capital is 8% and the anticipated growth rate is 5% per annum
calculate the indicated market price, if the dividend of Rs.1 per share is to be maintained.
b) Write short notes on Net operating Income approach. (3 marks)
15. A company was recently formed to manufacture a new product. It has the following capital structure:
Rs.
(i) 9% debentures (Face Value Rs.100) 10,00,000
(ii) 7% preference shares (Face Value Rs.100) 4,00,000
(iii) Equity share (48,000 shares) 16,00,000
(iv) Retained earnings 10,00,000
Total 40,00,000
The market price of equity share is Rs.80 and a dividend of Rs.8 per share is proposed. The Preference
shares can be redeemed at Rs.110 and the debenture can be redeemed at Rs.105 each. The company has
marginal tax rate of 50% and shareholders individual tax rate is 25%. Compute after tax weighted average
cost of capital of the company based on a) Book Value b) Market Value.
16. It is proposed to introduce a new machine to increase the production capacity of department X. two
machines are available, Type ‘A’ and type ‘B’. The following information is available:
Details A(Rs) B (Rs.)
Cost of machine 3,50,000 6,30,000
Estimated life(years) 7 10
Estimated savings in scrap p.a 20,000 32,000
Additional cost of indirect materials p.a 10,000 16,000
Estimated savings in wages:
Employees not required 15 20
Wages per employee per annum 10,000 16,000
Additional cost of maintenance p.a 7,200 12,000
Additional cost of supervision p.a 24,000 36,000
The rate of taxation can be regarded as 50% of profits. Which machine can be recommended for
purchase according to Pay Back Period?
17. X ltd., is carrying on business of purchase and sale of a item. Selling price is Rs.80 and purchase price is
Rs.60. during Dec 2007, Jan 2008, feb2008, and March 2008, its sales were 300 units, 400units,
500units, and 600units respectively. 10% of sales are on cash basis and the balance on one month’s
credit basis. Its office expenses are Rs.3,000 per month. Cash balance on 1.1.2008 Rs.10,000. At the end
of each month, the stock was nil.
Prepare a cash budget for the months Jan, Feb., and March 2008.
PART – C
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20. X Ltd, is considering investing in a project requiring a capital outlay of Rs.8,00,000. Forecast for annual
net incomes after depreciation but before tax are as follows:
Year 1 2 3 4 5
Profits(Rs.) 4,00,000 4,00,000 3,20,000 3,20,000 1,60,000
Before tax
Depreciation may be taken as 20% on original cost and taxation at 50% of net income. You are required to
evaluate the project according to each of the following methods:
(a) payback method; (b) rate of return on original investment method; (c) rate of return on average
investment method; (d) NPV method taking cost of capital as 10%; (e) P.I method.
21. A company has prepared its annual budget, relevant details which are reproduced below:
(i) Sales Rs.46.80 lakh 78,000 units
(25% cash sales and balance on credit)
(ii) Raw material cost 60% of the sales value
(iii) Labour cost Rs. 6 per unit
iv) Variable over heads Re. 1 per unit
(v) Fixed over heads Rs.5 lakhs
(Including Rs.1,10,000 as depreciation)
(vi) Budgeted stock levels:
Raw materials 3 weeks
Work in progress 1 week (material 100%) labour and
Overheads approx. 50%)
Finished goods 2 weeks
(vii) Debtors are allowed credits for 4 weeks
(viii) Creditors allow 4 weeks credit
(ix) Wages are paid bimonthly
(x) Lag in payment of overheads 2 weeks
(xi) Cash in hand required Rs.50,000
Prepare the working capital budget for the year for the company making whatever assumptions
that you may find necessary.
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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.DEGREE EXAMINATION –COMMERCE
SIXTH SEMESTER – APRIL 2019
CO 6608– FINANCIAL MANAGEMENT
PART – A
5. The current market price of an equity share of a company is Rs. 90. The current dividend per share is
Rs. 4.50. In case the dividends are expected to grow at the rate of 7%, calculate the cost of equity
capital.
6. A company raised preference share capital of Rs. 1,00,000 by issue of 10% preference shares of Rs.
10 each. Calculate the cost of preference capital when they are issued at 10% premium.
Rs.
10. A, a refrigerator manufacturer, purchases 1,600 units of a certain component from B. His annual
usage is Rs. 1,600 units. The order placing cost is Rs. 100 and the cost of carrying one unit for a year
1
PART – B
14. A company issues 10% irredeemable debentures of Rs. 1,00,000. The company is in the 55% tax
bracket. Calculate the cost of debt (before as well as after tax) if the debentures are issued at:
a) Par,
b) 10% discount and
c) 10% premium.
15. Varadhan Ltd. is producing articles mostly by manual labour and is considering to replace it by a
new machine. There are two alternative models M and N of new machine. Prepare a statement of
profitability showing the pay-back period from the following information.
Machine M Machine N
Estimated life of machine 4 years 5 years
Cost of machine Rs. 9,000 Rs. 18,000
Estimated savings in scrap 500 800
Estimated savings in direct wages 6,000 8,000
Additional cost of maintenance 800 1,000
Addition cost of supervision 1,200 1,800
Ignore taxation.
16. From the following information, extracted from the books of a manufacturing company, compute the
operating cycle in days and the amount of working capital required:
Period covered 365 days
Average period of credit allowed by suppliers 16 days
(Rs. In ‘000)
Average total of debtors outstanding 480
Raw material consumption 4,400
Total production cost 10,000
Total cost of sales 10,500
Sales for the year 16,000
Value of average stock maintained:
Raw material 320
Work-in-progress 350
Finished goods 260
17. From the following data, calculate (a) Safety stock, (b) Re-order Level, and (c) Maximum Level in
respect of material ‘A’.
2
Economic Order Quantity 500 units
Lead time 3 weeks
Weekly usage 50 units
Weeks of safety stock desired by firm 2
PART – C
ANSWER ANY TWO QUESTIONS: (2 x 20 = 40 marks)
18. Explain the factors influencing the financial decision of finance manager.
19. From the following capital structure of a company, calculate the overall cost of capital, using (a)
book value weights and (b) market value weights.
Source Book value Market value
Rs. Rs.
Equity share capital ( Rs. 10 per share) 45,000 90,000
Retained earnings 15,000 -
Preference share capital 10,000 10,000
Debentures 30,000 30,000
The after-tax cost of different sources of finance is as follows:
Equity share capital: 14%: Retained Earnings: 13%; Preference share capital: 10%; Debentures: 5%
20. A ltd. is considering the purchase of a machine which will perform some operations which are at
present performed by workers. Machines X and Y are alternative models. The following details are
available:
Machine X Machine Y
Rs. Rs.
Cost of machine 1,50,000 2,40,000
Estimated life of machine 5 years 6 years
Estimated cost of maintenance p.a. 7,000 11,000
Estimated cost of indirect material p.a. 6,000 8,000
Estimated savings in scrap p.a. 10,000 15,000
Estimated cost of supervision p.a. 12,000 16,000
Estimated savings in wages p.a. 90,000 1,20,000
Depreciation will be charged on straight line basis. The tax rate is 30%. Evaluate the alternatives
according to:
(a) Average rate of return method
(b) Net Present value (c) Profitability index method assuming cost of capital being 10%.
(The present value of Re. 1.00 @ 10% p.a. for 5 years is 3.79 and for 6 years is 4.354)
3
Particulars Amount (Rs.)
Equity Shares of Rs.100 each 20,00,000
Retained Earnings 10,00,000
9% Preference Shares 12,00,000
7% Debentures 8,00,000
Total 50,00,000
The company earns 12% on its capital. The income tax rate is 50%. The company requires a sum of
Rs.25,00,000 to finance its expansion project for which it is considering the following alternatives:
(i) Issue of 20,000 Equity Shares at a premium of Rs.25 per share;
(ii) Issue of 10% Preference Share;
(iii) Issue of 8% Debentures.
It is estimated that the Price Earnings ratios in the case of Equity, Preference shares and Debenture
financing would be 21.4, 17 and 15.7 respectively. Which alternative would you consider to be the
best?
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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.DEGREE EXAMINATION –COMMERCE [*******]
SIXTH SEMESTER – APRIL 2018
CO 6608– FINANCIAL MANAGEMENT
PART B
ANSWER ANY FOUR QUESTIONS (4 X 10 = 40 MARKS)
1
Tax rate : 50%
Current EBIT: Rs. 8,50,000
Current EPS : Rs.2.50
Current market price :Rs. 25 per share
Financial Plan I : 10,000 Equity Shares at Rs. 25 per share
Financial Plan II : 12 % Debentures of Rs.2,50,000
You are required to calculate: (a) Earnings per share (b) Indifference point between
Plan I and Plan II.
15. Calculate the degree of (a) Operating Leverage, (b) Financial Leverage,
(c) Combined
Leverage, from the following information and interpret the results.
16. `From the following particulars. Calculate (a) Net operating cycle, (b) Number of
operating cycles in a year, (c) The amount of Working Capital.
Details
17. A company has to choose any one of the following two mutually exclusive projects.
2
Investment required for each project is Rs.15,000 and both have to be depreciated
on straight line method assuming that income tax is @ 50%.
PART C
ANSWER ANY TWO QUESTIONS (2 X 20 =40 MARKS)
Set up your calculation for the average amount of working capital required.
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20. A limited is considering investing in a project requiring a capital outlay of Rs.2,00,000.
Forecast of annual income after depreciation but before tax is as follows”
1 1,00,000 .909
2 1,00,000 .826
3 80,000 .751
4 80,000 .683
5 40,000 .621
Depreciation may be taken as 20% on original cost and taxation at 50% of net income.
Calculate:
(a) Pay-back period
(b) Discounted pay-back period
(c) Rate of return on original investment
(d) Net present value
(e) Profitability index method
21. Neeraon Moody Ltd., has an all equity capital structure consisting of 5000 equity
shares of 100 each. The management plans to raise Rs.3,00,000 for expansion
programme. The expected EBIT after expansion is Rs. 1,50,000. The company has the
following four options:
1) To issue 3000 equity shares of Rs. 100 each
2) To issue 1000 equity shares Rs.100 each and issue 9% preference shares for
Rs.2,00,000
3) To borrow a bank loan for Rs. 3,00,000 at 10% interest p.a..
4) To issue 1000 equity shares of Rs.100 each and for the balance of Rs.2,00,000
a bank loan is raised at 10% p.a.
Suggest the best alternative with the justifications assuming that income Tax of
50% .
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4
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.DEGREE EXAMINATION – COMMERCE
SIXTHSEMESTER – APRIL 2017
CO 6608- FINANCIAL MANAGEMENT
1
15. A company has an investment opportunity costing Rs. 40,000 with the following expected net cash
inflows (i.e., after tax and before depreciation):
Year Net cash inflows
Rs.
1 7,000
2 7,000
3 7,000
4 7,000
5 7,000
6 8,000
7 10,000
8 15,000
9 10,000
10 4,000
Determine the “Internal rate of return” with the help of 10% discounting factor and 15% discounting
factor which is given below:
Year Present value factor @ Present value factor @
10% 15%
1 0.909 0.870
2 0.826 0.756
3 0.751 0.658
4 0.683 0.572
5 0.621 0.497
6 0.564 0.432
7 0.513 0.376
8 0.467 0.327
9 0.424 0.284
10 0.386 0.247
16. Determine the average rate of return from the following data of two machines A and B.
Machine A Machine B
Rs. Rs.
Original cost 56,125 56,125
Additional investment in net working capital 5,000 6,000
Estimated life in years 5 5
Estimated salvage value 3,000 3,000
Average income-tax rate 55% 55%
Annual estimated income after dep. and tax:
1st year 3,375 11,375
2nd year 5,375 9,375
3rd year 7,375 7,375
4th year 9,375 5,375
5th year 11,375 3,375
36,875 36,875
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17. Prepare a cash budget for the month May, June and July 2009 on the basis of the following
information:
Month Credit sales Credit purchases Wages Manufacturing Office expenses Selling
Rs. Rs. Rs. expenses Rs. expenses
Rs. Rs.
March 60,000 36,000 9,000 4,000 2,000 4,000
April 62,000 38,000 8,000 3,000 1,500 5,000
May 64,000 33,000 10,000 4,500 2,500 4,500
June 58,000 35,000 8,500 3,500 2,000 3,500
July 56,000 39,000 9,500 4,000 1,000 4,500
August 60,000 34,000 8,000 3,000 1,500 4,500
PART – C
ANSWER ANY TWO QUESTIONS: (2 x 20 = 40 marks)
18. A company capital structure consists of the following:
Equity shares of Rs. 100 each Rs. 20 lakhs
Retained Earnings Rs. 10 lakhs
9% Preference shares Rs. 10 lakhs
7% Debentures Rs. 10 lakhs
Total
Rs. 50 lakhs
The company earns 12% on its capital. The income-tax rate is 50%. The company requires a sum of
Rs. 25 lakhs to finance its expansion programme for which following alternatives are available to it:
(i) Issue of 20,000 equity shares at a premium of Rs. 25 per share.
(ii) Issue of 10% preference shares.
(iii) Issue of 8% debentures.
It is estimated that the P/E ratios in the case of Equity, Preference and Debenture financing would be
21.4, 17 and 15.7 respectively.
Which of the three financing alternatives would you recommend and why?
19. The balance sheet of M/s. ABC company shows the following items as at 31st December, 2008:
Rs.
Paid up cap: 4,00,000 equity shares of Rs. 10 each 40,00,000
Reserves and surplus 60,00,000
15% Non-convertible Debentures 20,00,000
14% Institutional loans 60,00,000
Other information about the company as relevant is given below:
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Year Dividend per Earnings per Market price
ended 31st share share per share
December Rs. Rs. Rs.
2008 4.00 7.50 50.00
2007 3.00 6.00 40.00
2006 4.00 4.50 30.00
You are required to calculate the weighted average cost of capital, using book values as weights and
Earning/Price (E/P) ratio as the basis of cost of equity.
20. Vishnu Ltd is considering two different investment proposals. The details are as under:
Investment Proposal I Proposal II
estimated Rs. 9,500 Rs. 20,000
Inflows
Year 1 Rs. 4,000 Rs. 8,000
Year 2 4,000 8,000
Year 3 4,500 12,000
Suggest the most attractive proposal on the basis of pay Back period, Net Present value
&ProfitabilityIndex Considering the discount Rate as 12%.
21. X Co. desires to purchase a business and has consulted you and one point on which you are asked to
advise them is the average amount of Working Capital which will be required in the first year’s
working.You are given the following estimates and instructed to add 10% to your computed figure
to allow for contingencies
Figure for the year
i. Average amount locked up in Stocks Rs.
Stock of Finished goods 5,000
Stock of stores and materials 8,000
ii. Average Credit given:
Inland Sales – 6 Weeks 3,12,000
Export Sales – 1½ Weeks 78,000
iii. Lag in Payment of wages and other outgoing:
Wages – 1½ Weeks 2,60,000
Stores, Materials, etc. – 1½ months 48,000
Rent, Royalties, etc. – 6 months 10,000
Clerical staff salary – ½ month 62,400
Manager salary – ½ month 4,800
Miscellaneous Expense – 1½ months 48,000
iv. Payment in advance!
Sundry Expense [Paid Quarterly in advance] 8,000
v. Undrawn profits on the average throughout the year 11,000
Setup your Calculations for the average amount of working capital Required
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4
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.DEGREE EXAMINATION –COMMERCE [*******]
SIXTH SEMESTER – APRIL 2018
CO 6609– MANAGEMENT ACCOUNTING
1
Section ‘B’
Answer any FOUR questions: 4 x 10= 40 Marks
11. You are given the following Balance Sheet. Calculate Current ratio, Liquid ratio, Absolute liquid
ratio, Debt equity ratio, Fixed assets ratio and Proprietary ratio.
Liabilities Rs. Assets Rs.
12. Draw up a flexible budget for production at 75% and 100% capacity on the basis of the following
data for a 50% activity.
Per unit
Rs.
Materials 100
Labour 50
Variable expenses (direct) 10
Administrative expenses (50% fixed) 40,000
Selling and distribution expenses (60% fixed) 50,000
Present production (50% activity): 1,000 units
13. The sales turnover and profit during two years were as follows:
Year Sales Profit
Rs. Rs.
2006 1,40,000 15,000
2007 1,60,000 20,000
Calculate:
(a) P/V Ratio
(b) Break-even point
(c) Sales required to earn a profit of Rs. 40,000
(d) Fixed expenses and
(e) Profit when sales are Rs. 1,20,000.
14. From the following data, calculate all labour variances:
Budgeted labour for computing job X:
8 skilled workers at Rs.10 per hour for 20 hours
12 unskilled workers at Rs.8 per hour for 20 hours
Actual labour for computing job X:
12 skilled workers at Rs.11 per hour for 20 hours
13 unskilled workers at Rs.7 per hour for 20 hours
15. A company manufactures a particular product the standard material cost of which is Rs.10 per
unit. The following information is obtained from the cost records:
Standard Mix:
Quantity Rate Amount
Material Rs.
Units Rs.
A 70 10 700
B 30 5 150
Total 100 850
Less: 15% 15 -
2
85 850
18. The following are the summarized Balance Sheets of Shekar Ltd., on 31-12-16 and 31-12-17.
Balance Sheets
2016 2017 2016 2017
Liabilities Assets Rs.
Rs. Rs. Rs.
Additional Information:
(i) During the year, a part of the machinery, costing Rs. 1,40,000 [accumulated
depreciation thereon Rs. 40,000] was sold for Rs. 1,02,000.
(ii) Dividend of Rs. 1,00,000 was paid during the year.
Ascertain:
(1) Changes in working capital for 2017
(2) Funds Flow Statement for 2017
19. The following ratios and other data related to the financial statement of J Co. Ltd for the year
ending 31st March 2018:
Working capital ratio (Current ratio) 1.75
Acid test ratio 1.27
Working capital Rs.33,000
Fixed assets to shareholders equity 0.625
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Inventory turnover ratio (based on closing stock) 4 times
Gross Profit Ratio 40%
Earnings per share Re. 0.50
Debt collection period 73 days
No. of shares issued 20,000
Earnings for the year on share capital 25%
The company has no prepaid expenses, deferred charges, intangible assets or long-term
liabilities. You are required to draft the company’s profit and loss account and balance sheet.
20. A newly started Pushpak Co. wishes to prepare cash budget from January. Prepare a cash budget
for the 6 months from the following estimated revenue and expenses.
Production Selling & Distribution
Total sales Materials Wages overhead
Months overhead
Rs. Rs. Rs. Rs.
Rs.
January 20,000 20,000 4,000 3,200 800
February 22,000 14,000 4,400 3,300 900
Cash balance on 1st January was Rs.10,000. A new machine is to be installed at Rs. 30,000 on
credit, to be repaid by two equal installments in March and April. Sales commission at 5% on total
sales is to be paid within the month following actual sales.
Rs. 10,000 being the amount of 2nd call may be received in March. Share premium amounting to Rs.
2,000 is also obtained with 2nd call.
Period of credit allowed by suppliers – 2 months
Period of credit allowed to customers – 1 month
Delay in payment of overheads – 1 month
Delay in payment of wages – ½ month
Assume cash sales to be 50% of the total sales.
21. The following particulars are extracted from the records of a company:
Details Product A Product B
Sales (per unit) Rs.100 Rs.120
Consumption of material 2KG 3KG
Material cost Rs.10 Rs.15
Direct wages cost Rs.15 Rs.10
Direct expenses Rs.5 Rs.6
Machines hours used 3 2
Overhead expenses:
Fixed Rs.5 Rs.10
Variable Rs.15 Rs.20
Direct wages per hour is Rs.5. Comment on the profitability of each product (both use the same raw
material) when:
i. Total sales potential in units is limited
ii. Production capacity (in terms of machine hours) is the limiting factor
iii. Material is in short supply
iv. Sales potential in value is limited.
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4
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.DEGREE EXAMINATION – COMMERCE
SIXTH SEMESTER – APRIL 2019
CO 6609– MANAGEMENT ACCOUNTING
SECTION – A
Answer ALL the Questions (10 * 2 = 20)
1. Find out Fixed Assets and Gross Profit from the following information:
Sales Rs.10,00,000
Gross Profit Ratio 25%
Fixed Assets Turnover Ratio (on cost of sales ) 5 times.
2. Find out the Provision for income tax made during the financial year 2003 – 04:
Balance of provision for tax on 1-4-2003 Rs.2,65,000
Balance of provision for tax on 31-3-2004 Rs.2,90,000
Tax paid during 2003-04 Rs.3,00,000.
3. Variable overheads for production of 10,000 units are Rs.60,000.what will be the variable overheads for
production of (a)15,000 units; (b)20,000 units?
9. What is budgeting?
1
SECTION – B
Answer any FOUR questions (4 * 10 = 40)
12. Calculate Funds From Operations from the following Profit and Loss a/c.
13. Draw up a flexible budget for production at 75% and 100% capacity on the basis of the following data for a
50% activity.
Materials per unit Rs.100
Labour per unit Rs.50
Variable expenses (direct) per unit Rs.10
Administrative expenses (50% fixed) Rs.40,000
Selling and distribution expenses (60% fixed) Rs.50,000
Present production (50% activity) : 1,000 units.
14. A.G.Ltd. furnished you the following related to the year 1996.
First half of the year Rs. Second half of the year Rs.
Assuming that there is no change in prices and variable cost and that the fixed expenses are incurred
equally in the 2 half year periods, calculate for the year 1996:
(a) The profit volume ratio
(b) Fixed expenses
(c) Break even sales and
(d) % of Margin of safety.
2
15. (a) From the following, calculate material price variance, assuming standard price per kg of Rs.8.
Opening stock of material: 50kg at Rs.10 per kg
Material purchased 850 kg at Rs.10 per kg
Closing stock of material 100kg.
(b) The following standards are given
Material A : 20kgs at Rs.20 per kg
Material B : 30kgs at Rs.10 per kg
The actual results were:
Materials A : 25kgs at Rs.18 per kg
Materials B : 28kgs at Rs.11 per kg.
Calculate (1) Materials Mix Variance
(2) Material Sub-Usage Variance
(3) Material Usage Variance.
17. What are the differences between Fund Flow statement and Balance Sheet?
SECTION – C
Answer any TWO questions (2 * 20 = 40)
18. Following are the Ratios relating to the trading activities of Neela Traders Ltd.,Madras.
Gross profit for the year amounted to Rs.18,000. Closing inventory of the year is Rs.2,000 above the
opening inventory. Bills receivable amount to Rs.2,500 and Bills payable Rs.1,000.Ascertain the
following:
(a) Sales (b) Debtors (c) Closing Inventory (d) Sundry Creditors.
19. The following is the Comparative Balance sheets of Pratima & Co.Ltd.as on 30 th June 1987 and 30th
June 1988.
3
Additional Information:
(i) Depreciation charged on Machinery Rs.10,000 and on Buildings Rs.8000.
(ii) Investments sold during the year Rs.3000.
(iii) Rs.15,000 Interim dividend paid during January 1988.
(iv) Taxes paid during the year Rs.30,000.
Prepare (a) A Statement of changes in working capital.
(b) A Fund Flow Statement.
20. The sales turnover and profit during two years were as follows:
21. A newly started Pushpak Co., wishes to prepare cash budget from January. Prepare a cash budget for the 6
months from the following estimated revenue and expenses.
Cash balance on 1st January was Rs.10,000. A new machine is to be installed at Rs.30,000 on credit,
to be repaid by two equal instalments in march and April.
Sales commission at 5% on total sales is to be paid within the month following actual sales.
Rs.10,000 being the amount of 2nd call may be received in March.
Share premium amounting to Rs.2000 is also obtained with 2nd call.
Period of credit allowed by suppliers – 2 months
Period of credit allowed to customers – 1 month
Delay in payment of overheads – 1 month
Delay in payment of wages – ½ month
Assume cash sales to be 50% of the total sales.
4
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
SIXTH SEMESTER – APRIL 2016
CO 6609 – MANAGEMENT ACCOUNTING
Rs.
10% Preference share capital (fully-Paid) 4, 00,000
64,000 Equity shares of Rs.10 each (fully-paid) 6, 40,000
Undistributed reserves and surplus 25, 60,000
Net profit after tax 9, 50,000
8. From the following particulars prepare production budget for the year ended June 30, 2015:
Product Sales in units Estimated stock (units)
As per sales budget July 1, 2014 June 30, 2015
A 1,50,000 14,000 15,000
B 1,00,000 5,000 4,500
C 70,000 8,000 8,000
Rs.
10. From the following information, find out the amount of profit earned during the year using marginal costing
technique:
Fixed Cost Rs. 5, 00,000
Variable cost Rs. 10 per unit
Selling Price Rs. 15 per unit
Output level 1, 50,000 units
1
PART- B
Answer any FOUR Questions: (4 x 10= 40 marks)
11. Enumerate the functions of Management Accounting.
12. Explain how accounting ratios are classified.
13. From the following particulars calculate a) B E P b) Margin of safety for 2015
c) Profit when the desired sales is Rs.1,50,000 d) Sales when the desired profit is Rs.25,000.
14. Find the funds from operations from the following data:
Opening balance of profit and loss A/c: Rs. 60,000
Closing Balance of profit and loss A/c: Rs. 30,000
The following items appeared in Profit and loss A/c:
Interim dividend paid Rs. 20,000; Proposed dividend Rs. 30,000; Depreciation Rs.50,000; Preliminary
expenses Rs.1,000; Loss on sale of machinery Rs. 3,000; General reserve Rs.5,000;
Sinking Fund Rs. 10,000; Salaries paid Rs. 3,000; Profit on sale of car Rs. 4,000; and Tax paid Rs.5, 000.
15. Using the information below, prepare a cash budget showing expected cash receipts and disbursements for the
month of June and balance expected on June 30, 2015:
Budgeted cash balance June 1, 2015 Rs. 1, 20,000. Sales for June Rs.16,00,000, half collected in the month of
sale, 40% in next month, 10% in third month.
Customer receivables as of June 1 Rs. 1, 40,000 from April sales, Rs. 9, 00,000 from May sales.
Merchandise purchases for June Rs. 10, 00,000, 40% payment in the month of purchases,
60% paid in the next month. Wages due in June Rs. 1, 76,000.
Three years insurance policy due in June for renewal Rs. 4,000 to be paid in cash.
Other expenses for June, payable in June Rs.88, 000.
Depreciation for the month of June Rs.4, 000.
Accrued taxes for June, payable in December Rs. 12,000.
Fixed deposit receipts due June 15 – Rs. 3, 50,000 plus Rs.20, 000 interest.
165kg
Calculate (i) Material price variance; (ii) Material usage variance (iii) Material mix variance
Material(iv) yield variance.
17. A gang of workers usually consists of 10 men, 5 Women and 5 boys in a factory. They are paid at
standard hourly rates of Rs. 1.25, Re. 0.80 and Re.0.70 respectively. In a normal working week of 40
hours, the gang is expected to produce, 1000 units of output. In a certain week, the gang consisted of
13 men, 4 women and 3 boys. Actual wages were paid at the ratio of Rs.1.20, Re. 0.85 and Re.0.65
respectively. Two hours were lost due to abnormal idle time and 960 units of output were produced.
Calculate labor variances.
2
PART- C
Answer any TWO Questions: (2 x 20= 40 marks)
18. You are given the following information pertaining to a company:
Current Ratio - 2.5
Liquid Ratio - 1.5
Net Working Capital - Rs. 3, 00,000
Stock turnover ratio (Cost of sales/closing stock) - 6 times
Gross profit ratio - 20%
Fixed assets turnover ratio (on cost of sales) - 2 times
Average Debt collection period - 2 months
Fixed assets/shareholders’ net worth - 0.80
Reserves and Surplus/Capital - 0.50
Draw up the Balance Sheet of the company.
19. A toy manufacturer earns an average net profit Rs. 3 per piece of Rs. 15 by producing and selling
60,000 pieces at 60% of the potential capacity. Composition of his cost of sales is:
Direct materials Rs. 4.00
Direct wages Rs. 1.00
Works overheads Rs. 6.00 (50% Fixed)
Selling overheads Rs. 100 (25% varying)
During the current year, he intends to produce the same number but anticipates that:
(i) His fixed changes will go up by 10%
(ii) Rates of direct wages will increase by 20%
(iii) Rates of direct material will increase by 5%
(iv) Selling price cannot be increased under these circumstances he obtains, an order for a further 20% of
his capacity. What minimum price will you recommend for accepting the order to ensure the
manufacturer an overall profit of Rs. 1, 80,500?
20. A company produces a standard product. The estimated cost per unit are as follows:
Raw materials – Rs. 4.00; Wages – Rs. 2.00; Variable overhead – Rs. 5.00.
The semi-variable costs are:
Indirect materials – Rs.235; Indirect labor – Rs. 156; Repairs – Rs. 570.
The variable costs per unit included in semi-variable are:
Indirect materials – Re. 0.05; Labor – Re.0.08; and Repairs – Re. 0.10.
The fixed Costs are:
Factory – Rs. 2,000; Administration – Rs. 3,000; Selling and distribution – Rs. 5,000.
The above costs are for 70% of normal capacity producing 700 units. The selling price is Rs. 10 per unit.
Prepare flexible budget for 80% and 100% normal capacities from the above information.
21. Prepare a Funds flow statement from the following summarized balance sheets of FTC Ltd. As at 31 st
March 2015 and 2016.
Liabilities 2015 2016 Assets 2015 2016
3
Provision for Tax 75,000 10,000
$$$$$$$
4
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.DEGREE EXAMINATION – COMMERCE
SIXTHSEMESTER – APRIL 2017
CO 6609- MANAGEMENT ACCOUNTING
12. What do you mean by Zero Based Budgeting and what are the steps involved in it?.
1
b. Calculate funds from operations from the following profit and loss account: (5)
Profit and loss A/c
Rs. Rs.
5,10,000 5,10,000
2
17. A multipurpose Co. Furnishes you the following data relating to a year:
I half II half
Rs. Rs.
Sales 45,000 50,000
Total Cost 40,000 43,000
Assuming that there is no change in prices and variable costs and that the fixed expenses are incurred
equally in two half years.
Calculate:
1. P/V Ratio
2. Fixed expenses
3. B.E. Sales
4. Percentage of margin of safety.
Additional Information:
1. Dividends were paid Rs.7,000
2. Land was purchased for Rs.20,000/- and the amount provided for amortization of Good will
totaled Rs.10,000/-.
3. Debenture loan was repaid Rs.12,000
You are required to prepare Fund Flow Statement and Statement of Changes in Working Capital.
3
19. Using the information given below, compute Trading and profit and loss account and the Balance sheet:
Gross profit Ratio 25%
Net profit Ratio 20%
Stock turnover Ratio 10 times
Net profit/Capital 1/5
Capital/ to Total liabilities ½
Fixed Assets/ Capital 5/4
Fixed Assets/ Total current assets 5/7
Fixed Assets Rs.10,00,000
Closing stock Rs.1,00,000
20. For the production of 10,000 electric automatic irons, the following are budgeted expenses:
Per Unit (Rs.)
Direct materials 60
Direct labour 30
Variable overheads 25
Fixed overheads (Rs.1,50,000) 15
Variable expenses (direct) 5
Selling expenses (10% fixed) 15
Administration expenses 5
(Rs.50,000 rigid for all levels of production)
Distribution expenses (20% fixed) 5
Total cost of sale per unit 160
Prepare a budget for the production of 6,000, 7,000 and 8,000 irons, showing distinctly marginal cost,
total cost and Per Unit Cost.
21. Following information has been made available from the cost records of Automobile Co.,
manufacturing spare components
Direct Materials – XRs. 8 per unit
Y Rs. 6 per unit
Direct Wages – X 24 hours @ 0.25 paise per hour
Y 16 hours @ 0.25 paise per hour
Variable Overheads 150% of direct wages
Fixed Overhead Rs.750
Selling Price X Rs. 25 per Unit
Y Rs. 20 per Unit
The directors want to be acquainted with the desirability of adopting any one of the following alternative sales
mixes in the budget for the next period.
a)250 units of X and 250 units of Y
b)400 units of Y only
c)400 units of X and 100 units of Y
d)150 units of X and 350 units of Y
State which of the alternative sales mixes you would recommend to the management.
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4
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.DEGREE EXAMINATION – COMMERCE
FIFTH SEMESTER – NOVEMBER 2018
CO 5506– HUMAN RESOURCE MANAGEMENT
SECTION – B
Answer any FOUR questions: (4x10=40)
SECTION – C
Answer any TWO questions: (2x20=40)
18. What are the qualities of a good human resource manager? Describe the difficulties and
challenges faced by human resource managers.
19. Explain in detail the steps involved in the selection process.
20. Define Training. Explain the process of assessing training needs. How do human resource
managers evaluate training effectiveness?
21. Explain the various methods of performance appraisal.
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1
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
FIFTH SEMESTER – NOVEMBER 2016
CO 5506 – HUMAN RESOURCE MANAGEMENT
PART – A
PART – C
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1
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
FIFTH SEMESTER – NOVEMBER 2017
CO 5506 – HUMAN RESOURCE MANAGEMENT
SECTION – A
SECTION – C
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